8-KOther Events

MORGAN STANLEY 8-K Report, Corporate Update (Jan 20, 2023)

Filed January 20, 2023For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley (MS) filed an 8-K on January 20, 2023, announcing the 2022 compensation for its Chairman and CEO, James P. Gorman. The Compensation Committee recognized Mr. Gorman's leadership in navigating a challenging market, with the firm reporting $53.7 billion in net revenues and $11 billion in net income for 2022, alongside a CET1 ratio of 15.3%. The firm also continued its commitment to shareholder returns through increased dividends and share repurchases. Despite the firm's resilient performance, 2022 results were not as strong as the record-setting prior year. Consequently, Mr. Gorman's total compensation for 2022 was set at $31.5 million, a 10% decrease from $35 million in 2021, reflecting the firm's overall performance. A significant portion of his compensation, 75% of incentive pay, is deferred over three years and delivered in equity awards, with 60% of his bonus in performance-vested equity, aligning his interests with those of shareholders.

Key Highlights

  • 1CEO James P. Gorman's 2022 total compensation set at $31.5 million, a 10% reduction from $35 million in 2021.
  • 2Firm reported 2022 net revenues of $53.7 billion and net income of $11 billion ($6.15 per diluted share).
  • 3Full-year 2022 ROTCE was 15.3%, efficiency ratio was 73%, and standardized CET1 capital ratio was 15.3%.
  • 4Morgan Stanley increased its quarterly dividend to $0.775 and returned $5.1 billion to shareholders via dividends and $9.9 billion through share repurchases in 2022.
  • 575% of Mr. Gorman's incentive compensation is deferred over three years and delivered in equity awards.
  • 660% of Mr. Gorman's bonus is in the form of performance-vested equity, tied to predetermined performance goals.
  • 7Compensation decision considered 2022 performance relative to the prior year's record financial results.

Frequently Asked Questions

The CEO's total compensation for 2022 was reduced by 10% to $31.5 million, down from $35 million in 2021. This decision was made by the Compensation Committee in consideration that while the firm demonstrated resilience and solid financial performance in a challenging market, its overall performance in 2022 was not as strong as the record-setting results achieved in the prior year.

Mr. Gorman's 2022 compensation totals $31.5 million and is comprised of four components: a $1.5 million base salary, a $7.5 million cash bonus, a $4.5 million deferred equity award, and an $18 million performance-vested equity award. Notably, 75% of his incentive compensation is deferred over three years and delivered in equity, with 60% of his bonus being performance-vested equity tied to specific firm performance goals.

For the full year 2022, Morgan Stanley reported net revenues of $53.7 billion and net income of $11 billion, or $6.15 per diluted share. The firm maintained a strong capital position with a standardized Common Equity Tier 1 capital ratio of 15.3% at year-end, and reported a Return on Tangible Common Equity (ROTCE) of 15.3% with an efficiency ratio of 73%.

A significant portion of Mr. Gorman's compensation is structured to align his interests with shareholders. 75% of his incentive compensation is deferred over three years and delivered in equity awards, making it subject to forfeiture if performance targets are not met. Additionally, 60% of his bonus is in the form of performance-vested equity, which converts to shares only if the firm achieves predetermined strategic and performance objectives.